This paper starts by showing that Chile and Malaysia are on the path of escaping the middle-income trap in terms of their income level relative to that of the USA. In contrast to the conventional view, we find that the leading export sectors are not manufacturing (such as electronics) in Malaysia or mining alone in Chile. Instead, the engines of growth have been (1) resource-based sectors (petroleum, rubber and palm oil) in Malaysia; and (2) non-mining resource-based sectors (salmon, fruits, wine and wood-based) in Chile. Furthermore, the sustained growth of these sectors is not the result of free-markets, as frequently argued, but also of specific industrial policy measures, that have enabled the accumulation of productive and innovation capabilities through R&D support, fiscal incentives, export assistance, and quality control. We also find that the emergence of locally-controlled firms has been an important aspect of this long-term success, although the sources of the initial learning included foreign actors and FDI. The cases of Chile and Malaysia consequently show the possibility of escaping the middle-income trap not through manufacturing but instead through resource-based development. Such strategy differs from the so-called short cycle technology-based catch-up by the East Asian tigers and from the unsustainable commodity rent-extraction in resource-rich countries, but is consistent with the view that emphasizes the need to specialize in sectors with low entry barriers, and to promote investments in innovation and technological capabilities.

Conventional wisdom has proclaimed Chile's recent economic development a ‘free market miracle’. In an examination of Chile's export diversification experience, this article departs from that view. By analysing the dynamics underlying the emergence of the salmon, fruit, forestry and wine sectors in Chile's export basket since the 1960s, the study sheds light on the crucial role of industrial policy in the process of capability accumulation that shapes new industries. The article undertakes a qualitative historical analysis of the scope and nature of policy interventions in each of the four sectors and conducts a quantitative policy evaluation using the difference‐in‐difference method. It finds that public institutions are essential in overcoming market failures inhibiting the emergence of new industries. Specifically, it shows that the government has a key role to play as a catalyst of human capital accumulation, as a venture capitalist, in trade promotion, and in ensuring ‘national’ sector reputation through a strong regulatory and quality control role. By elaborating on the dynamic process of structural transformation and capability accumulation, this article contributes to theoretical debates on the role of vertical policies in the emergence of new competitive sectors, and debates relating to static versus dynamic approaches to comparative advantage.

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This article is part of the author's Ph.D. research that was undertaken at the University of Cambridge. Special thanks, therefore, go to Ha-Joon Chang for supervising the doctoral work on which this paper is based. I am also thankful to the RIPE editors and three anonymous reviewers who provided very constructive comments, and to Jomo Kwame Sundaram, Maha Abdelrahman, Rajah Rasiah, Keun Lee, Carlo Pietrobelli, JP Faguet and Natalya Naqvi for pointing me towards useful literature and theoretical concepts. Early versions of this paper were presented in the International Schumpeterian Society 2018 conference in Seoul (South Korea) and at the European Association for Evolutionary Political Economy 2018 conference in Nice (France). Special thanks also go to all the academics, government officials, private sector representatives, and other experts who gifted me their time and insights during fieldwork interviews in Malaysia. In particular, for their tremendous support during my fieldwork, I would like to thank

Climate change has taken an increasingly important space in the development agenda. However, whether most countries can meet the challenge of mitigating climate change while simultaneously ensuring growth and poverty reduction remains debatable. This research contributes to the growing literature at the intersection of environment sustainability and economic/industrial development by identifying three dimensions of Green Industrial Policy (GIP), which rely on different approaches to mitigate climate change. Those three dimensions are: (i) the consumption-centred dimension; (ii) the firm-level sustainability dimension, (iii) the productionist innovation-driven dimension. This paper then applies this green industrial policy framework and examines the implications of pursuing different levels of GIP by drawing on a country case study (Ecuador). Two main findings arise from this study. Firstly, a greener consumption is necessary but can hardly be achieved without industrial policies to stimulate green manufacturing and low carbon innovation. Green industrial policy therefore has a central role to play in the structural transformation towards a low carbon future. Secondly, a holistic and complementary approach is needed across the three dimensions of green industrial policy to ensure a coherent and developmental transition towards a low carbon economy.